April 27, 2017

How Micro-Cooperatives Are Transforming The Kenyan Coffee Trade


The Kenyan coffee industry is changing. Green bean buyers here are used to working with big estates and large cooperatives – some with up to 12,000 members. But relaxed regulations has allowed forward-thinking Kenyan producers to create a new model: that of the micro-cooperative.

By banding together in small groups, farmers are able to establish relationships with buyers that emphasise cup scores, long-term partnerships, and transparency.

But why is this happening? And what impact will it have on producers and buyers? We spoke to Melanie Leeson of Collaborative Coffee Source and Giovanna Rocha of Kenyacof, one of Collaborative Coffee Source’s partners, to find out more.

Spanish Version: Cómo las Micro-Cooperativas están Transformando el Mercado del Café en Kenia

Kenyan coffee

A small group of farmers works together to ensure coffee quality. Credit: Collaborative Coffee Source

How Is Kenyan Coffee Traded?

Most Kenyan coffee is purchased via a central auction – a system in which smallholder producers don’t meet buyers and are unable to advocate for their coffee. In these auctions, licensed coffee dealers only are allowed to bid. They’re run by the Nairobi Coffee Exchange, while the coffee is graded by the Kenya Coffee Producers and Traders Association (KCPTA).

But according to Daily Nation, Kenya’s most-read daily newspaper, some producers feel that this allows purchasers to collude to keep prices low. What’s more, for buyers and consumers, the auction model prevents transparency along the supply chain.

The other option is “direct sales” (also known as “second window”). This is where you see direct trade happening, as well as more traditional exporter/importer relationships. An organisation or person in Kenya will negotiate directly with a buyer outside of the country.

Direct sales of coffee are a new phenomenon in Kenya, but last year they accounted for nearly 15% of the country’s sales. It’s part of a growing movement towards producer autonomy.

So what does this look like for producers? And what difference does it make for buyers and consumers?

Kenyan coffee production

Mr. Banat Gavanaga, leader of a small group of farmers. Credit: Collaborative Coffee Source

The Farmers Turning Away From Cooperatives

Giovanna tells me that, historically, just over half of Kenya’s coffee producers were big estates or cooperatives with 100–12,000 members each. But the divide is changing. In fact, Melanie calculates that today smallholders control 58% of the country’s coffee production.

But what’s driving this movement?

“In the last few years, small producers who have delivered their coffee to the co-ops didn’t get enough income selling their coffee,” Giovanna explains, “and some were tired of the political side of these societies.”

Melanie adds, “Not all cooperatives work equally well. It often proved frustrating for a buyer to align themselves with specific co-ops and factories, because of things like corruption, mismanagement issues, and fluctuating quality.”

It’s worth mentioning that not all cooperatives are a bad choice for smallholder farmers – like in all producing regions, cooperatives can offer great levels of support and training. And they make it easier to access the Nairobi Coffee Exchange and thereby find buyers.

However, some producers want more than this.

Kenyan coffee production

The Collaborative Coffee Source crew during farm and mill visits in Kenya. Credit: Collaborative Coffee Source

Farmer–Owned Washing Stations

Some producers are now taking matters into their own hands by building their own washing stations. “This has been made possible,” Giovanna says, “since the Kenyan government reduced the minimum size of coffee to be [processed and sold] by farmers, allowing them to have their own pulping stations.”

Larger producers are able to sell single-estate coffees directly to buyers. Others are forming micro-cooperatives. In doing so, they can focus on working with other farmers who share their vision for high-quality coffee. Giovanna tells me that Kenyacof helps clusters of 8–12 producers to complete the legal requirements for selling coffee as a group.

This is a new model – Kenyacof is currently only working with three groups – but it has the potential to have a strong positive impact.

Coffee washing stations

A washing station in Kenya. Credit: Five Senses Coffee

SEE ALSO: VIDEO Guide: What Does a Kenyan Agricultural Officer Do?

Why Is Farmer Autonomy Important?

Giovanna believes that this new model allows producers to be more autonomous, interacting with the market directly and making decisions about how their coffee will be processed and traded. When they take control over what happens to their coffee, not only can they follow best practices but they can do so with a greater sense of purpose.

So will this result in a real increase in quality? At this early stage, it’s hard to tell.

“We have to see how things go because this is the very beginning of the first stage in Kenya,” Melanie says. She adds that, in other countries that Collaborative Coffee Source works in, it takes a minimum of a year to see an increase in quality – and significantly longer to know that it will be a sustained improvement.

But Melanie expects to see a positive impact. She tells me that, just like in regions with well-established farm-level marketing, such as in the Americas, smaller farm groups promise even greater quality. And what’s more, they allow for stronger, longer-lasting relationships between the buyer and producer.

Kenyan coffee production

Kenyan coffee ready for export. Credit: Jørgensen Kaffebrenneri

Melanie finishes by saying that, in Kenya, farmers have a product that is in great demand. If they have the capacity to organise themselves, and the self-determination to market their coffee, this could be the model of the future. And it would be one that’s highly beneficial to producers.

Collaborative Coffee Source is a sponsor of Perfect Daily Grind. This interview was conducted in accordance with our editorial policies, and Collaborative Coffee Source has had no greater influence on the final copy than any of our other interviewees.
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